Following the oral argument in Zubik, the Court directed the parties to file supplemental briefs addressing whether the employees of petitioners with "insured plans" could receive contraceptive coverage "through petitioners’ insurance companies," without requiring the objecting employers to provide either of the forms of "opt out" notice (to the government or to the insurance company) that the current accommodation regulation prescribes. The Court elaborated with a particular hypothetical proposal:

For example, the parties should consider a situation in which petitioners would contract to provide health insurance for their employees, and in the course of obtaining such insurance, inform their insurance company that they do not want their health plan to include contraceptive coverage of the type to which they object on religious grounds. Petitioners would have no legal obligation to provide such contraceptive coverage, would not pay for such coverage, and would not be required to submit any separate notice to their insurer, to the Federal Government, or to their employees. At the same time, petitioners’ insurance company—aware that petitioners are not providing certain contraceptive coverage on religious grounds—would separately notify petitioners’ employees that the insurance company will provide cost-free contraceptive coverage, and that such coverage is not paid for by petitioners and is not provided through petitioners’ health plan.

The parties filed their opening briefs in response on Tuesday. (They will file simultaneous reply briefs next Wednesday.)

In order to understand the parties' different views on the question the Court posed, it is necessary to separately consider what they have to say about "insured" plans and "self-insured" plans, respectively. In addition, at the end of this post I offer a few words about the 26 petitioners who do not fall in either category, because they offer (or are otherwise involved with) employee "church plans." (I discuss the distinctions between these different sorts of health insurance plans in this post, among others.)

Insured plans
The Court's order referred specifically to petitioners that offer their employees access to "insured" health care plans. In such cases, an employer purchases an employee insurance policy from an insurance company, or issuer, such as Aetna or Blue Cross/Blue Shield, and the issuer itself then bears the costs of reimbursing employees for their health care expenses.

As I noted in this post, five of the petitioners currently offer their employees participation in insured plans: Catholic University, Geneva College, Oklahoma Baptist University, Oklahoma Wesleyan University, and Priests for Life. Three of those five petitioners (Catholic University, Geneva College, and Oklahoma Baptist University) also offer their students an insured plan, as does a sixth petitioner, Southern Nazarene University. (Three other individual petitioners--Alveda King, Janet Morana and Father Frank Pavone--are directors of Priests for Life.)

The government's argument as to insured plans.

The government explains in its supplemental brief that the Court's proposal for employers with insured plans basically describes the government's existing accommodation itself, with one exception. Most importantly, under the Court's approach, as under the existing accommodation, separate “contraceptive coverage [would] be obtained by petitioners’ employees through petitioners’ insurance companies,” Order at 1, and the insurer would make payments to the employees, dependents and/or students directly, not through the employer’s health plan.

There is only one minor difference between the existing accommodation and the Court's proposal, related to the manner in which the employer would be able to communicate its decision to opt out of the obligation to provide contraceptive coverage. Under the existing regulatory accommodation, an employer opts out by either sending a written notice to HHS, or by "self-certifying" its eligibility for the accommodation on a government form that it provides to the insurer. Under the Court's proposal, by contrast, the employer would also be able to simply inform the insurance company, when it is negotiating their contract, that it does not want the health care plan "to include contraceptive coverage of the type to which [it] object[s] on religious grounds"; that statement would be sufficient to trigger the insurer's obligation of payment, and the employer would not then have to use one of the notifications prescribed in the current regulation.

The government argues that the Court "should not" allow employers to opt out of coverage in the manner the Court describes, for their own sake and the sake of the insurers. The regulatory self-certification process, it explains, "was adopted with broad support from commenters, including many religious organizations, because it provides clarity and certainty to all parties whose rights and duties are affected by the accommodation." (The government describes the benefits in greater detail at pages 8-11 of its supplemental brief. Of course, manyreligious organizations with opposition to contraceptive coverage, unlike the petitioners, have complied with the existing notification requirements, and they and their insurers benefit from them in the ways the government describes.) The Court's "informal" notice option, by contrast, would not accomplish these salutary objectives.

Even so, the government explains that adding the Court's additional permissible form of the employers' opt-out notification would not prevent the government from advancing its compelling interests: women would still receive ready, cost-free access to the full range of contraceptive services, and would have access to needed health care that is equal to that of their male counterparts. Accordingly, the government does not oppose allowing the petitioners to use the Court's alternative form of notice, if it would eliminate any alleged substantial burden on their religious exercise, and if the Court were to hold that RFRA would not require anything more in the event that other objecting organizations (those not among the plaintiffs in these seven cases) continue to argue that their religious exercise is substantially burdened.

To be sure, the petitioners (apparently all 37 of them) now represent that they would have no religious objection to most of the components of the Court's proposal--all of which are in the current accommodation, too (other than the new, additional form of notification). For example, petitioners now purport to be ok with a scheme in which the sameinsurance company that operates the employees' general health insurance plan would also be required to provide payments for contraceptive services to the plan's beneficiaries--something that at least 22 of the 37 petitioners recently suggested would be inconsistent with their religious obligations. See Zubik petitioners' merits brief at 36 ("Petitioners believe that in order to stay true to their Catholic faith, they may hire an insurance company only if it will not provide their students and employees with coverage that may destroy human life or artificially prevent its creation.")

Petitioners would insist upon separate "payment sources, and communication streams" for the contraception coverage--but that's not a disagreement, because the existing accommodation already requires insurers to guarantee such separation. Petitioners also state that separate "insurance cards" are necessary. The existing accommodation, however, permits insurers to issue separate cards for contraception coverage, something that an employer presumably can insist upon in its contract with the insurer. See 80 Fed. Reg. 41328 (July 14, 2015) ("The Departments do not believe that this [dual card] practice, in of itself, would constitute a barrier to [women] accessing separate payments for contraceptive services.").

Petitioners continue to insist (p.3) that "[t]he current regulatory scheme . . . requires petitioners to take affirmative steps that enable their health plans to be 'hijacked' for the delivery of contraceptive coverage." The basis of this allegation appears to be petitioners' understanding that, under the government's current regulatory scheme, "there is just a single plan that automatically comes with payments for contraceptive services" (p.6). That's simply wrong, however. Under the government's accommodation, the insurer must “[e]xpressly exclude contraceptive coverage from the group health insurance coverage provided in connection with the [employer’s] group health plan,” and must “[p]rovide separate payments” for contraceptive services. 45 C.F.R. § 147.131(c)(2)(i). Indeed, those payments “are not a group health plan benefit,” at all. 78 Fed. Reg. 39,876 (July 2, 2013). Therefore the metaphor of "hijacking" the underlying health care plan is inapt. Contrary to the petitioners' argument (p. 10), the payments by the insurer to the employees under the existing accommodation are not a "component of the petitioner’s plan" at all, let alone an "unavoidable" one.

Once that mischaracterization is overcome, does this mean that the parties are actually in agreement on the workability of the Court's proposal? Not quite. In at least one important respect, what the petitioners describe as their new set of baseline conditions differs from both the current accommodation and the Court's proposal.

Under both the existing accommodation and the Court's alternative proposal, insurers provide women (or their medical or service providers) with payment for contraception costs outside the auspices of any insurance policy (or "plan") altogether. In the words of the Court's proposal, the insurance company simply notifies the beneficiaries in the first instance "that the insurance company will provide cost-free contraceptive coverage" if and when the women ask for such payments, and then the insurance company makes such payments when any such claims are made. "Issuers have flexibility in how to structure these payments," provided, however, that the payments must "in no way involve the eligible [objecting religious] organization," 78 Fed. Reg. 39,877, and the company's scheme does not "create barriers to [women] accessing payments for contraceptive services," 80 Fed. Reg. 41328 (July 14, 2015).

Petitioners, however, represent that they would only accept a scheme under which the insurer is required to establish a "separate[] contract" (p.9) for contraception payments--presumably a separate insurance policy--with the female employees, dependents and/or students. Not only that, petitioners also insist that this second policy must have a "separate enrollment process[]," such that the female beneficiaries would not "automatically receive free contraceptive coverage solely by virtue of their enrollment in petitioners’ plans" (p.7). In other words, petitioners would require that the women (i) opt in (ii) to a new insurance contract with the insurer.

Petitioners do not explain why their religion requires that there be a second insurance policy, or why their religion requires their employees to "opt in" to the arrangement with the employer, even before they make any requests for payments for actual costs of contraception. Recall that petitioners' fundamental argument is that "under RFRA, any [acceptable] scheme would have to truly require no 'involvement of petitioners beyond their own decision to provide health insurance without contraceptive coverage to their employees'” (quoting the Court's order). Under the Court's proposal, however, there wouldn't be any such additional "involvement of the petitioners," regardless of whether the women in question had to go through a "separate enrollment process" or whether (as under the current accommodation and the Court's alternative) they would be entitled to payments automatically (i.e., whenever they purchase contraceptive services). That is to say, the petitioners are insisting upon particular forms of the relationship between third parties--the employees and the insurers--that have nothing to do with any involvement by the petitioners themselves. Why? They do not say. And they certainly have not explained why such an "opt in to a new insurance policy" arrangement, wholly among third parties, would be "essential to avoid [their own] moral complicity" in the women's use of contraception (p.11), or otherwise necessary in order to alleviate any burdens, substantial or otherwise, on their own exercise of religion.

Moreover, there are very good reasons for the government not to require the insurance companies to offer separate, contraceptive-only insurance policies, let alone to require women to take steps to "opt in" to be eligible to receive payments under such policies.

As it happens, the agencies originally proposed an accommodation scheme under which the insurance companies would have been required to issue to plan participants and beneficiaries separate, individual health insurance policies covering contraceptive services. Some commenters on that proposed rule, however, warned that such individual health insurance policies "might not be viewed as enforceable contracts under state contract law," because, among other things, "state laws would prevent issuers licensed to issue group health insurance policies in one state from issuing individual health insurance policies to employees of an eligible organization residing in other states." 78 Fed. Reg. 39876 (July 2, 2013). Indeed, the Archdiocese of Washington, one of the petitioners in Zubik, told the agencies that "[i]n some cases, the creation of these 'individual polic[ies] covering only one service' would conflict with state law" (quoting "Insurers May Incur Significant Costs from Proposal on Contraceptive Benefit Opt-Out," AIS’s Health Reform Week, Feb. 11, 2013, at 1). See also, e.g., Comments of America's Health Insurance Plans at 2-4; Comments of Kaiser Permanente at 6-7; Comments of the Groom Law Group at 12-14.

Commenters also "expressed concern about the cost and administrative complexity of issuing and administering individual contraceptive coverage policies." 78 Fed. Reg. 39876. The D.C. Archdiocese, for example, commented that requiring such new policies would involve “'administrative hassles such as setting up and getting state approval for new individual insurance products' and potentially 'significant' costs in providing notice to eligible employees" (quoting "Insurers May Incur Significant Costs," supra)--costs that the Archdiocese feared might indirectly be passed on to the objecting employers.

In light of these comments, the agencies amended the regulations to establish the requirement that issuers simply "provide payments for contraceptive services, in lieu of individual health insurance policies that cover contraceptive services"-- what the agencies rightly characterized as a "simpler approach " that "responds to concerns raised by commenters, while still ensuring that eligible [objecting religious] organizations and their plans do not contract, arrange, pay, or refer for such coverage, and that contraceptive coverage is expressly excluded from the group health insurance coverage." 78 Fed. Reg. 39876. The agencies explained (id.):

Unlike under the proposed regulations, [under the final rule] the issuer is not required to issue to plan participants and beneficiaries individual health insurance policies covering contraceptive services, and, thus, there is no need to consider such coverage [as] excepted benefits, as proposed. Instead, under these final regulations, the issuer must, as a federal regulatory requirement, provide payments for contraceptive services for plan participants and beneficiaries, separate from the group health plan, without the imposition of cost sharing, premium, fee, or other charge on plan participants or beneficiaries or on the eligible organization or its plan. Under this simplified approach, issuers will not incur the associated administrative costs of issuing individual contraceptive coverage policies.

This simpler approach to the accommodation for insured coverage does not trigger certain aspects of state insurance law. As the payments at issue derive solely from a federal regulatory requirement, not a health insurance policy, they do not implicate issues such as issuer licensing and product approval requirements under state law, and they minimize cost and administrative complexity for issuers. At the same time, because the payments for contraceptive services are not a group health plan benefit under this approach, this policy ensures that eligible organizations and their plans do not contract, arrange, pay, or refer for contraceptive coverage, and that such coverage is expressly excluded from their group health insurance policies. This approach also minimizes barriers in access to care because plan participants and beneficiaries (and their health care providers) do not have to have two separate health insurance policies (that is, the group health insurance policy and the individual contraceptive coverage policy).

Commenters also raised the question of employees' "automatic enrollment" in a separate plan was also raised by commenters--including the United States Conference of Catholic Bishops, which urged the agencies to "giv[e] women the choice to opt out" of coverage to which they object. Other commenters, by contrast, were concerned that "allowing participants and beneficiaries to opt out of such contraceptive coverage would create an administrative burden on issuers and privacy concerns for individuals because the issuers would know which individuals opted in or opted out of such coverage." 78 Fed. Reg. at 39878. (As far as I know, no commenters urged what the petitioners are now insisting upon, i.e., that women be required to "opt in.")

In promulgating the amended, final rule, the agencies explained that the new "simplified approach described in these final regulations," which does not require insurance companies "to issue individual contraceptive coverage policies at all," "eliminates this [involuntary enrollment] issue altogether." id. As the agencies wrote (id.):

[Issuers] are required only to provide payments for contraceptive services for those plan participants and beneficiaries who opt to use such services. Nothing in these final regulations compels any plan participant or beneficiary to use such services, and nothing causes participants or beneficiaries to be automatically enrolled in contraceptive coverage; therefore, these concerns are addressed without the need for an opt-out mechanism.

To now require the insurance companies to provide separate insurance policies, rather than simple independent payments, and to require the women in question to take a superfluous and burdensome "extra step" of "opting in" to such policies (or to eligibility for "coverage"), even before they make any claims for payment relating to contraceptive services, thus would not only serve no purpose in terms of alleviating burdens on the employers' religious exercise, but would also impose unnecessary and costly burdens on the insurance companies and on the women -- barriers that are never imposed upon men in order to receive their health-care coverage, and that would result in fewer women having access to effective contraception.*

[UPDATE: I've edited this next point for purposes of clarity.] In support of their insistence on an "opt in" requirement, petitioners suggest that, because they are entitled under Title VII of the 1964 Civil Rights Act to limit their employment to coreligionists, their employees are "more likely" to share their religious beliefs "and are thus less likely to opt for coverage that violates those shared religious beliefs." (p.11) There are at least two problems with this argument, however.

First, most of the petitioners do not limit their hiring to coreligionists and, moreover, many of the coreligionists they do hire (and many other dependents of the organizations' employees) do not share the employers' beliefs that certain forms of contraception are immoral. The regulation is designed to promote the access of those women to affordable, effective contraception.

Second, the petitioners are, of course, correct to suggest that some of their employees (and dependents of their employees, and students) will share their religious views, and will either not use the forms of contraception in question, or will not seek payment for the costs when they do purchase such contraception. But in those cases, the women will never ask for payment from the insurance companies, and there will be no morally conduct in which the organizations themselves might be complicit. Therefore, it's not clear how the fact that some employees would not use the contraceptive coverage could possibly affect the employers' exercise of religion, or be the basis for insisting upon a requirement that women "opt in" to a separate insurance policy in addition to the "opting in" that they must do when they request payment for contraceptives.

For these reasons, I assume the government will argue, in its reply brief, that the petitioners' deviation from the Court's proposal would neither address any substantial burden on petitioners' religious exercise, nor further the government's compelling interests as effectively as either the existing accommodation or the Court's proposal.**

Self-insured plans

Three of the 37 petitioners--East Texas Baptist University, Southern Nazarene University and Thomas Aquinas College--offer their employees "self-insured" plans that are not "church plans." (Southern Nazarene is the one overlapping petitioner, in that it offers its employees a self-insured plan, and offers its students an insured plan.) In a self-insured plan, the employer itself—not an issuer—bears the financial risk of paying claims. Most if not all self-insured plans use insurance companies or other third parties to administer their plans and to perform functions such as developing networks of providers, negotiating payment rates, and processing claims. The agencies' accommodation with respect to self-insured plans is in most respects identical to the accommodation in the case of an insured plan, except that the TPA—rather than an issuer—must provide or arrange payments for contraceptive services to the plan beneficiaries. And, because of certain facets of the Employee Retirement Income Security Act (ERISA), the benefits in the case of a self-insured plan are, in a purely legal sense, offered "through" the plan itself (something that's not true in the case of objecting employers with insured plans), albeit without any involvement, payment, or administration by the objecting employer.

The Court did not specifically ask the parties to address such self-insured plans, presumably because it realized that the payments and the underlying plans cannot be legally separated in such a case. The parties have briefly addressed such plans, however. They agree that no proposal such as the Court's would resolve the RFRA dispute with respect to self-insured plans, because, under ERISA, the government lacks any authority to require TPAs to provide coverage that is legally not part of the underlying employee plan.

The parties disagree, however, about what follows from that fact. The petitioners argue that the agencies must therefore entirely exempt the three employers with self-insured plans from the regulation and the accommodation, such that their employees would not get contraceptive coverage. (Petitioners reiterate their argument that Congress could amend the law to provide, e.g., that women could obtain such coverage by purchasing a "contraception-only" plan on an exchange, presumably subsidized by a new congressional appropriation. I've explained elsewhere why this is not a "less restrictive" alternative for RFRA purposes.***)

The government, by contrast, reiterates the point it made in its opening brief (at 39 n.16), namely, that "petitioners could avoid any objectionable features of the regulations applicable to such [self-insured] plans by switching to insured plans." (Notably, one of the three--Southern Nazarene University--already does offer an insured plan to its students, although not to its employees.) Of course, that option will only suffice, from petitioners' perspective, if the regulation for insured plans does not require them to violate purported religious injunctions. But if the regulation as applied to an insured plan would not substantially burden their religious exercise, then East Texas Baptist University, Southern Nazarene University and Thomas Aquinas College have not offered any reason why that available option does not foreclose their RFRA claims.

Self-insured "church plans"The remaining 26 petitioners, including Little Sisters of the Poor, are in another category altogether. They either offer their employees access to what is known under ERISA as a "church plan," or are in some other respect associated with such church plans. (See my listing at the end of this post.)

Petitioners discuss church plans at pages 17-19 of their supplemental brief. Church plans, however, have always been something of a red herring in this litigation, because there is no realistic prospect that the beneficiaries of such plans--including the employees of the retirement homes operated by Little Sisters--will ever be entitled to receive payments for their use of contraceptive services, and therefore there will be no use of contraception in which these 26 petitioners might conceivably be "complicit."

ERISA defines certain sorts of self-insured plans, operated by certain sorts of religious entities, as "church plans" that are exempt from ERISA. As I've explained previously (see, e.g., this post), and as Justice Sotomayor noted in footnote 6 of her dissenting opinion in Wheaton College, because of this quirk in ERISA, the government does not have the legal authority to require the TPAs of "church plans" to provide payments for contraceptive services once the employers opt out--it can only ask the TPAs to do so. What's more, as petitioners explain (pp. 17-18), the TPAs of church plans, such as the Christian Brothers Employee Benefit Trust (one of Little Sisters' TPAs), typically "share[] the religious beliefs of the church with which the employer is affiliated and has crafted a plan specifically designed to be consistent with those beliefs." And if there are any cases in which the TPA of a church plan does not share the employer's beliefs, the employer can simply prohibit that TPA from providing contraception coverage as a term of its contract.

In all events, then, an employer using a church plan has control over whether its employees will be able to receive payments for contraception. It follows that the accommodation regulation cannot possibly impose a substantial burden on such employers' religious exercise, because their employees' contraceptive use will not be subsidized unless the employer wishes it to be. In this respect, the employers truly are, in all practical respects, already exempt from the regulation and, as I've argued previously, there is nothing at stake in the RFRA claims brought by employers who use church plans, such as Little Sisters. (Indeed, for these reasons, these petitioners might even lack Article III standing to sue. [UPDATE: I had forgotten that the D.C. Circuit, in the Priests for Life case, has already held that employers with church plans do have standing to sue, based upon the doctrine that for purposes of standing analysis, the court must accept the allegations as true. 772 F.3d at 244. I'm not sure how much sense this ordinarily proper rule makes where (as here) the theory of injury is facially implausible because it's based on the assumption of something occurring (payment to employees for contraceptive use) that is completely within the plaintiffs' power to prevent; but the government has not challenged the standing holding.])

Compendium of posts on Hobby Lobby, Zubik, and related cases
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* In at least one point in their supplemental brief (p.6), petitioners imply that the burden of "enrollment" would be on employees ("the insurance companies could separately contact petitioners’ employees and give them the option of enrolling in the separate, contraceptive-only policy"). If so, that would create another potential problem, because if a particular employee failed to enroll, his or her dependents under age 26, such as a wife and daughters, presumably would not be entitled to coverage.

** Petitioners repeat the idea (p.14 n.2), mentioned by the Chief Justice at oral argument, that "[t]he government’s contention that it has a compelling interest in providing coverage 'seamlessly' . . . essentially collapses the separate compelling interest and least restrictive means analyses." As I discussed in a post-argument post, however, the government's principal compelling interest is that women have full, affordable access to contraceptive services--or, even more precisely, that women are empowered to avoid unplanned pregnancies and other health problems (something that the full, affordable access to contraception makes possible). The government does not, of course, have an abstract, stand-alone interest in any particular means of achieving that goal; "seamlessness" is essential because it's the only way to effectively guarantee that women can obtain the contraceptive services--which in turn prevents health risks and pregnancies, and helps secure women's equality in the workplace.

*** Petitioners write (p.21 n.4) that "the government still has the option that it proposed in the courts below: allowing any of petitioners’ employees who want contraceptive coverage to obtain subsidized health plans on the Exchanges" (citing Gov’t. Resp. Br. at 21 n.4, Little Sisters v. Burwell (10th Cir. 2014) (No. 13-1540)). In that 2014 footnote, however, the government described that as an option for a objecting employer: It could cease offering employee health insurance altogether, in which case its employees would be able to obtain full, subsidized insurance on an exchange. The government itself, however, cannot offer the option of purchasing affordable, compliant health insurance plans on the exchange to women who work for employers that offer an employee plan, unless and until Congress enacts a statutory amendment and a substantial new appropriation to pay for such purchases.